John: I agree. But, in my mind, the question is why.
The problem I have is that the natural processes that typically provide the adjustment mechanism are not being allowed to work. Though, again my view, the market process provides the least cost method of adjustment.
Just think how we are approaching the issue of energy.
There is a significant portion of the population that believes in energy independence. Wrong, wrong, wrong. Everyone should (needs to!!) understand the most basic concepts in economic trade theory: comparative and absolute advantage. There are few things in economics that have the twin advantage of being non-trivial and "true." Don't get me wrong. I believe in energy security, but not independence. Suppose very country tried to be independent in every "important" good. In my view the world would be a very poor place.
Lots of people don't agree with me.
Thats OK. Having been a professional investor for decades, I am used to being wrong and having my views challenged. I am a very simple person: I believe in free people, the free exchange of ideas, and the power of free markets (with the obvious understanding that free markets mean an important role for government to protect private property, uphold contracts, solve market failure (monopolis, public goods, and externalities). I also believe in public and private charity - as long as we get the inccentive structure right. There are some other areas of government intervention that have merit in my mind - but thats my normative belief.
The only short term worry I have for energy is geo-political. Other than that, I see absolutely no worries. As I look around the world, I have no concern that we are going to wake up one day and say: On my god, we have run out of oil. I just don't believe thats the way the world works.
Don't get me wrong, we may have already crossed the rubicon in terms of the financial health of the country. But thats a topic for another day. Also, poor (though well intentioned) government policy can gum up the works.
We live in interesting times to say the least.
As much as I hate to say it. The probability that the US can not recover from its debt orgy have risn dramatically. A friend and former partner spent his formative years in Russia. You should hear his tales of what happens when a national economy fails to work. Its a sad tale.
Economic decline is not any country's fate, its a choice. And in my view, it may be the choice of the US.
THough it brings to mind that great quote my Churchill: (maybe a paraphrase::) You can always count on Americans to do the right thing - as long as they have exhausted very other possibility
Cheers
Risky
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